In Acquiring SABMiller, AB InBev to face Sale of Chinese stake

Anheuser-Busch InBev recently made news by creating the world’s biggest beer company, but have to let go the best selling beer on the planet: China’s Snow.

This is among the probable outcomes that Guotai Junan Securities Co. is anticipating in the wake of AB InBev’s agreement to acquire SABMiller for US$ 106 bn. In the recent notes to clients, analysts’ at BNP Paribas, Daiwa Capital Markets, and Goldman Sachs have pointed out the likelihood of such a scenario.

One of the major features of the merger is that the Belgian company would receive almost 40% of the beer market in China. This indicates way too much for the comfort of regulators and would lead to disposal of a stake of the joint venture back to China Resources Enterprise. The 49% stake of SABMiller in the venture, called as the China Resources Snow Breweries, is possibly worth US$ 5 bn, as stated by Nomura Holdings.

As stated by the Guotai Junan’s spokesperson, in this type of deal antitrust would be the biggest issue for the type of purchase. In the instance of manifestation of the deal, the combined market of China Resources and AB InBev is likely to trigger antitrust review.

However, for the Budweiser maker, giving away the Chinese venture would be same as paying penalty to a market that is expected to be worth US$ 44.1 bn by 2019, as estimated by Euro monitor. The Chinese beer, Snow, which had more than 23% of China’s market in 2014, records sales more than any other beer globally, after it superseded Bud light sales in 2008. Further as stated by Budweiser website, the production of beer by the company can fill almost 12 Olympic-sized swimming pools each day.

However, a spokesperson for China Resources Enterprises, refused to comment about the effect of the AB InBev –SABMiller deal on his employer